It is an illegal secret agreement concluded between competitors to fix
prices, restrict supply and/or divide up markets. The agreement may take a wide
variety of forms but often relates to sales prices or increases in such prices,
restrictions on sales or production capacities, sharing out of product or
geographic markets or customers, and collusion on the other commercial
conditions for the sale of products or services.

Why are cartels harmful to consumers, businesses and to the economy in
general?

Cartels shield participants from competition allowing them to charge higher
prices and removing the pressure on them to improve the products they sell or
find more efficient ways in which to produce them. It is the customers
(companies and consumers) who foot the bill in terms of paying higher prices for
lower quality and narrower choice. This not only makes consumers and businesses
suffer but also adversely affects the competitiveness of the economy as a
whole.

What legal basis underpins the Commission’s action to combat
cartels?

Article 81 of the Treaty establishing the European Community prohibits
agreements and concerted practices between firms that distort competition within
the Single Market. Fines of up to 10% of their worldwide turnover may be imposed
on the guilty parties.

What happens to the proceeds from fines?

The amount of the fines is paid into the Community budget. The fines
therefore help to finance the European Union and reduce the tax burden on
individuals.

Does the Commission have the last word?

All cartel decisions by the Commission may be appealed against before the
Court of First Instance (CFI) and then before the Court of Justice of the
European Communities in Luxembourg. They can, therefore, be closely scrutinised
by these two courts, which are empowered to annul decisions in whole or in part
and to reduce or increase fines, where this is deemed appropriate.

What is the European Commission’s leniency programme?

It encourages firms to provide the Commission with insider information on
cartels. The first firm to do so is granted total immunity from fines. Other
firms that follow suit may be granted a reduction in the amount of the fine.
This policy is very effective in uncovering cartels but does not prevent the
Commission from conducting investigations on its own initiative. For further
information, see IP/02/247
and MEMO/02/23.

Companies wishing to approach the Commission in order to benefit from the
Commission notice on immunity from fines and reduction of fines in cartel cases
should consult:

What practical steps has the Commission taken to step up action against
cartels?

Since June 2005 an entire Directorate composed of four units (Directorate F,
with a staff of around 60) in the Competition Directorate General has been
involved exclusively in helping the Commission to detect and punish cartels.

What action is open to consumers and companies who feel that they have
been victims of such illegal agreements?

Any firm or individual adversely affected by practices censured by the
Commission, such as those set out in today's decision, may bring the matter
before a court in a Member State of the European Union with a view to seeking
compensation for damage suffered as a result of such practices. Fines imposed by
the Commission are different from the damages awarded by national courts. While
action for damages before a court can also have a certain deterrent effect, its
main purpose is to compensate victims of anti-competitive behaviour or to secure
compensation for damage suffered. A Commission Green Paper on facilitating
action for damages before courts in the Member States was published in December
2005.

What are the ten largest fines imposed by the Commission in cartel
cases?